Update on pricing dispute with British Sugar

RNS Number : 4734S

Real Good Food Company Plc (The)

24 September 2014

 



The Real Good Food Company plc (AIM: RGD) 

Update on pricing dispute with British Sugar

The Real Good Food Company plc ("the Group") is a diversifiedfood business, serving a number of market sectors including retail, manufacturing, wholesale, foodservice and export. The Group is a major distributorof sugar in the UK through its Napier Brown subsidiary, and manufactures awide range of baking ingredients, jams and sweet bakery products. Its portfolio of brands includes Whitworths Sugar, Renshaw and R&W Scott.

The Group was informed yesterday by the Competition and Markets Authority ("CMA") that Napier Brown's complaint against British Sugar had not passed the CMA's prioritisation procedure.

In a detailed letter to the company, the CMA has thanked us for bringing the matter to their attention and made the point that the case has 'strategic value'. However, the CMA felt that conducting a full investigation would, taking into account the complexity of the issues involved, require significant economic and legal resources and, on the basis of previous similar investigations, take at least two years to conclude. They informed us that as they currently have 9 live competition enforcement cases, the strategic benefits are outweighed by the risks and resources involved in pursuing the case.

The CMA acknowledged that the decision not to prioritise does not mean that Napier Brown's case is not valid, merely that the CMA does not see it as having sufficient priority within its portfolio of cases at present and makes the point that it does not prevent it from deciding to open an investigation in the future.

Had Napier Brown's case been weak, the Group believes that it presumably would not have taken first the Office of Fair Trading ("OFT") and then the CMA 12 months to consider whether to take the matter further. The Group suspects that the recent dramatic reduction in sugar prices may have contributed to the CMA believing that the market has sufficient competition. That may be so at present, when supply of sugar within the EU is plentiful, but the Group remains concerned that when stocks tighten, which the Group believes they inevitably will, competition will prove less than sufficient.

Napier Brown has an outstanding offer to take the complaint back to the European Competition Authorities in Brussels and intends to open discussions with them shortly.

At least the decision gives the business some clarity. Contingency plans for such an outcome were already in place and as such this decision does not affect current trading.

24 September 2014

ENQUIRIES: Real Good Food                               Pieter Totté, Chairman Tel: [phone] Mike McDonough Finance Director Tel: [phone] Andrew Brown, Marketing Director Tel: [phone] Shore Capital & Corporate (Nomad and Joint Broker) Tel: [phone] Stephane Auton Patrick Castle Daniel Stewart and Company Plc (Joint Broker) Martin Lampshire Tel: [phone] Cubitt Consulting Tel: [phone] Gareth David Cebuan Bliss

 

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